Automakers could only wish that the March sales numbers reported on Apr. 1 were a joke, but no one was laughing.
U.S. light-vehicle sales for the month of March fell 12% from the year-ago month, to 1,356,868. That was the worst result so far this year, based on monthly year-over-year comparisons. For the first quarter of 2008, U.S. sales were down 8% from the year-ago quarter, to 3,577,293.
Each of the Big Three had large double-digit sales decreases in March: General Motors (GM) fell 18.9%, to 277,751. Ford Motor's (F) sales dropped 14.2%, to 212,379. And Chrysler's fell 19.4%, to 166,386.
The news wasn't much better for imports. Sales also fell 10.3%, to 217,330, for Toyota Motor (TM). Honda Motor's (HMC) dropped 3.2%, to 138,734, and Nissan's (NSANY) fell 3.8%, to 106,921.
More Losses to Come
Consumers are putting off buying cars and trucks in the face of economic uncertainty and high gas prices. "A consumer who's worried about employment and the financial outlook is unlikely to invest in homes and vehicles. In the same way, businesses are reluctant to invest in new capacity. And banks and financial institutions are less likely to loan money for them to do these things, or they will charge a higher rate to do so," says Emily Kolinski Morris, Ford's senior economist for North America.
The auto industry could lose more than 400,000 sales this year as consumers put off acquisitions, due to issues related to housing, credit, and debt load, according to a survey by CNW Marketing Research, in Bandon, Ore.
Small cars, small SUVs, hybrids, and car-based crossovers—and some luxury brands—are the only product segments posting year-over-year sales gains. Ford said sales of its Edge crossover were up 23.8% in March over the year-ago month. For the quarter, Edge sales were up 47.2%, but it was an easy comparison because the Edge was launched in the year-ago quarter.
Toyota "Not Immune"
Gas-sippers including the hybrid Toyota Prius, the hybrid Camry, and the tiny, gas-powered Toyota Yaris all had record U.S. sales in March, said Bob Carter, Toyota division group vice-president and general manager, in an Apr. 1 conference call with reporters. "Fuel economy is foremost on the minds of consumers," he said.
However, the poor March results overall in the U.S. industry prompted Toyota to trim its U.S. auto industry sales forecast for the year. Toyota had been at the high end of a range of forecasts from analysts and other automakers. "It's clear the industry will be off our initial forecast of 16 million units this year," Carter said.
Without making a precise prediction, he said Toyota's new forecast will be in the mid-15-million range. That's roughly in line with Ford and GM, which stuck to their earlier, more pessimistic forecasts despite the March results. For the full year, that would be the worst sales total in at least a decade. U.S. sales in 2007 were about 16.1 million, down 2.5% from 2006.
"We are not immune to economic cycles, and we are not immune to auto industry downturns," Carter said. It certainly has seemed that way, as Toyota has enjoyed a couple of decades of more or less uninterrupted growth in U.S. sales. According to the Ward's Auto Web site, looking at Toyota's U.S. results for the last seven months vs. the year-ago period yields the worst year-over-year comparisons the Japanese automaker has posted since 1982. To be fair, the year-ago results include several all-time monthly sales records.
"Certainly that's not a situation we like to be in," Carter said. "But we have been growing market share six out of those seven months. I would like to show month-to-month gains, but the market is not giving us that today."
Even achieving sales of 15.5 million for all of 2008 is contingent on some improvement in the second half of 2008. The seasonally adjusted annual sales rate for March was only about 15 million, the automakers said.
Mike DiGiovanni, executive director of Global Market & Industry Analysis for GM, insisted that the looked-for improvement in the second half is not just wishful thinking, based on the effects of lower interest rates, economic stimulus checks being mailed to taxpayers, plus a hoped-for rebound in housing. He said the inventory of unsold houses has begun to shrink, which he took as a positive sign.
"Nine times out of 10, certain economic stimulus packages work. We haven't given them a chance to work. We haven't given them a chance even to take a bite yet, to get some traction," he said in an Apr. 1 conference call for Wall Street analysts and reporters. "We don't expect to see nirvana in the next 60 days, but we do expect to see some positive signs."